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June 27, 1994

THE INN AT SARATOGA ASSOCIATES, a New York limited partnership, MYRA RYNDERMAN, as administratrix of the estate of Monia S. Rynderman, WILLIAM F. CHANDLER, STEVEN N. FISCHER, ROY FISCHER, JOHN S. GIJANTO, LAWRENCE A. KOTLOW, RICHARD G. KOTLOW and JOHN E. WOLFGANG, individually, Plaintiffs,
FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver of Bank of New England, N.A., Defendant.

The opinion of the court was delivered by: LEE P. GAGLIARDI

 GAGLIARDI, Senior D. J.

 Plaintiffs commenced this action against Berkshire Bank & Trust Company ("Bank") in August 1986 in New York State Supreme Court, Albany County, raising several contract and tort claims. All of Plaintiffs' claims stem from an alleged contract between Plaintiffs and the Bank for a $ 1.3 million mortgage loan. In a letter dated June 2, 1994, the FDIC requested judgment in its favor, claiming protection against Plaintiffs' action under section 1823(e) of Title 12, United States Code, 12 U.S.C. § 1823(e) (as amended Aug. 9, 1989) ("§ 1823(e)"); the Court construes this letter as a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 56 (1994) ("Rule 56").


 The factual basis for Plaintiffs' complaint is as follows, with all the pertinent events occurring in 1985 unless otherwise indicated. On January 15 Plaintiff Monia S. Rynderman ("Rynderman") met with William H. Porter, Jr. ("Porter"), a Vice President and Regional Loan Officer of the Bank, seeking a $ 617,500 loan to be made to Plaintiff The Inn at Saratoga Associates ("Saratoga Associates"), a limited partnership, for the purchase and renovation of the Coachman Inn. On January 24 the Bank issued a commitment letter ("January 24 Commitment") for the above amount; Plaintiffs did not execute this letter. Per Rynderman's request, on April 9 the Bank issued a second commitment letter ("April 9 Commitment") for the amount of $ 875,000; this letter was similarly unexecuted by Plaintiffs.

 Loan officers from the Bank met with Plaintiffs during April and May to discuss increasing the loan amount to over $ 1 million. On June 24 Plaintiff Rynderman entered into a contract to purchase the Coachman Inn on behalf of Saratoga Associates. On June 26 the Bank's Officer Loan Committee ("OLC") voted to table the proposed loan to Plaintiffs, memorialized in the Loan Approval Record ("LAR").

 On July 3 Plaintiffs Kotlow, Fischer, Chandler, Gijanto and Wolfgang agreed to provide $ 200,000 in personal guarantees to induce the Bank to expand the proposed loan amount to $ 1.3 million. On that same day, the OLC approved the $ 1.3 million loan subject to certain conditions, memorialized in the Officer Loan Committee Minutes ("OLCM"). On July 15 Porter wrote a letter to Plaintiff Kotlow ("Porter letter") concerning the $ 1.3 million loan, which states in relevant part:

Our Loan Committee, subsequent to a formal review of the 3/31/85 financial statements on the Lookout Inn [(another inn owned by Plaintiffs)], have ratified the $ 1.3 million loan. I assumed [sic] that the financial statements on the Lookout Inn will give us the comfort that we seek in those statements and I look forward to ironing out all the final details relative to this mortgage loan at the earliest possible convenience.

 With regard to the $ 1.3 million loan, the Bank did not issue a formal commitment letter similar to the January 24 and April 9 Commitments.

 On August 21 Anito forwarded proposed closing documents to the Bank on behalf of Plaintiffs, referring to the total loan amount as $ 1.3 million. On August 26 the Bank's attorneys reviewed an internally-produced draft commitment letter for the $ 1.3 million loan; this draft was never finalized and thus no commitment letter was ever sent to Plaintiffs.

 On August 30 Saratoga Associates received a $ 375,000 loan from the Bank for its purchase of Coachman Inn ("Coachman Inn loan"). None of the documents relating to this transaction referred to the $ 1.3 million proposed loan. Plaintiffs took possession no later than September and satisfied this debt obligation on December 23.

 On September 10 officials from the Bank met with Plaintiffs to inform them that they had yet to provide the necessary documents for the $ 1.3 million loan. On September 26 the OLC again approved the $ 1.3 million loan subject to certain conditions. Between September and October, the Bank tried to find a participating lender, a condition that needed to be satisfied before the Bank proceeded with the loan. On October 3 the Bank rejected Plaintiff Kotlow's request for funds to pay construction expenses because a participating lender was yet to be found. On October 10 Rynderman demanded funds for construction expenses, which was again rejected. On October 23 Berkshire County Savings Bank agreed to participate in the loan but subject to its own distinct conditions. Finally, officials from the Bank agreed to proceed with financing the construction on November 6, but only upon different terms--as a short-term construction loan with Plaintiffs to seek permanent financing elsewhere.

 Separately, on October 23, Plaintiffs managed to procure a loan for $ 1.3 million from Norstar Bank of Upstate New York ("Norstar"); this loan closed on December 16. On December 23 Plaintiffs managed to have the loan amount increased to $ 1.55 million through Fleet Bank, Norstar's merger partner.

 On August 1, 1986, Plaintiffs commenced this litigation. Bank of New England ("BNE") subsequently acquired the Bank. On January 6, 1991, Defendant Federal Deposit Insurance Corporation ("FDIC") was appointed receiver of BNE, which ceased to exist as a legal entity. After exhausting their administrative remedies, Plaintiffs resumed this action against the FDIC on September 17, 1991.


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